Ramsey Ugarte: California governor’s budget offers only short-term solution for UCs

In his proposed budget, Governor Jerry Brown has not only prevented a deficit in this cash-strapped state but also increased spending, including an additional $250 million, or 5 percent increase, to the University of California budget.

But before we get too excited about the good news, it is important to understand exactly what his budget is – a projection.

It is impossible to precisely predict future revenue streams and, considering the past nature of state investment in higher education, the UC can’t trust the state of California to be its knight in shining armor.

Students will continue to be pressured by volatile tuition levels and a changing undergraduate experience as universities continue to grow in size.

And with universities across the country becoming increasingly bureaucratic and expensive, perhaps more money from the state is not the answer to student woes.

Dependence on unrealized revenue is a risky venture. We have seen previous state budget deficits worsen throughout the fiscal year – the last fiscal year ended with a cash deficit of $9.6 billion.

Combined with the deficit from the first six months of this fiscal year, which began in July, California’s deficit totaled $24.2 billion by Dec. 31, 2012. This balance was covered through internal borrowing and outside lenders, according to State Controller John Chiang’s January financial summary.

California still has a long way to go to get its finances in order because the debts will eventually have to be confronted.

Already, there has been disagreement among economists about whether the governor has actually avoided the deficit for the first time since Governor Gray Davis inherited a surplus. The nonpartisan Legislative Analyst’s Office still predicts a $1.9 billion deficit through 2013.

While $250 million in additional higher education funding is certainly welcome, state appropriations to the UC still do not cover the entirety of what was asked for, leaving the UC with a $150 million budgetary gap.  Even in the face of Proposition 30’s promised tuition freeze, the balance sheets begs the question whether tuition will see yet another increase to cover the university’s gap.

Regardless, Brown’s victory is a seemingly short-term solution.

While Brown has pledged money to pay down what he has deemed “The Wall of Debt,” the state still faces the enormous task of tackling its growing unfunded liabilities. Health care benefits and the nation’s largest pension program, amassing over $1 trillion in future obligations, are not included on the budget.

But let’s assume the budget remains the same and the UC receives the five percent budget increase. What happens next?

UC expenditures will continue to grow as they have in the past – expenditures have increased 15 percent since 2007-2008 – largely at the students’ expense in the form of tuition increases.

And for what? Richard Vedder, professor of economics at Ohio University, discusses the “inconvenient truths” of today’s universities: the country club atmosphere filled with more partying and less studying, a lack of income equality at elite universities and the increasing benefits for staff and administrators at the undergraduate’s loss.

The shortcomings of today’s universities are cultural -and solutions are difficult and long term.

More than anything, the rising cost of college has created a cycle of debt for college students graduating with theoretical, intangible skills gained from impersonal classroom settings.

Even if UC students are graduating with debt levels below the national average, there is significant danger in having to pay back loans in a faltering economy without necessarily knowing their life direction.

The bottom line: Jerry Brown’s good news masks the ugly truth. Even if dumping more money into the pot is a short-term solution, the overall mindset remains the same.

Though the step toward a state budgetary surplus is in the right direction, California’s looming debt and growing unfunded liabilities will cloud the state’s ability to provide these necessary skills to students and be a viable partner for the UC.

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